Microsoft Pays Premium for Skype

Industry shocked by massive price tag

Microsoft reportedly paid a shocking $8.5 billion to acquire Internet phone service giant Skype, only 20 months after eBay sold 65 percent of the company to a private equity group for $1.9 billion, which thus pegged its September 2009 value at $2.75 billion. The nearly $6 billion premium has industry analysts skeptical of Skype’s actual worth. The deal represents the most money Microsoft has ever shelled out for an acquisition.

The deal will bring Microsoft 660 million users from around the globe; it will also bring in $686 million in debt. Skype’s profitability has always been a weak point, with mostly free services like computer-to-computer calling central to its operation model. Some believe Microsoft may uniquely utilize Skype’s services by tapping into its Kinect gaming systems in order to allow for a higher quality of virtual collaboration among users.

The deal will likely be officially announced today or tomorrow, ending months of speculation over Skype’s future. Recent rumored suitors have run the gamut from Facebook and Google to Cisco Systems.